It is easy to blame shipbuilders, but it appears there is a good deal of blame that needs to be directed to the Navy as well.
The reasons for the cost overruns from the LM perspective are as follows:
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- The initial program’s aggressive acquisition plan, which resulted in a moderate risk program plan that provided little flexibility in the areas of cost and schedule from the outset.
- With little schedule flexibility from the outset, the program was significantly impacted by the insertion of new shipbuilding standards and build specifications (shortly after contract award and at the conclusion of Final Design) that introduced extensive changes, above those expected for a lead ship. The Naval Vessel Rules introduced over 14,000 new technical requirements which required review and adjudication to determine applicability to the Lockheed Martin LCS design. This in turn drove many of the over 600 engineering changes on the lead ship.
- Adverse material shortages (e.g., steel needed for U. S. Army wartime requirements) and a vendor supply issue on a major component (i.e., main reduction gears delivered six months late) that forced out-of-sequence ship module construction in order to minimize the impact to the overriding program management goal --- schedule.
- First-of-Class issues associated with the process of transitioning a new ship design into production.
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Testimony House Armed Services Committee
The Navy plan forward for the LCS is as follows:
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During the 90-day stop work period, the Navy will complete an Industry / Government Root Cause analysis; evaluate contractual terms / conditions for proceeding forward on LCS 3; assess LM management team’s ability to deliver LCS 1 and LCS 3; revalidate earned value management system at Marinette Marine, Gibbs & Cox, and LM; re-baseline cost and schedule; revalidate contract performance status, and cost control processes in place; conduct an independent Program Management Assist Group (PMAG) and take corrective actions. The Navy will then perform a similar assessment for LCS 2 and LCS 4. Based on the findings and recommendations the Navy will develop a proposed financing plan regarding the cost growth. The Navy expects these initial actions to be complete within the first 30-45 days following the LCS-3 stop work.
The Navy is also determining how much of the lead-ship cost increase will carry over to follow ships, assessing company actions to regain cost control, and evaluating changes to improve Navy program management and oversight. The Navy will also develop an acquisition strategy for LCS 5 and follow which factors in the results of the LCS assessments and chosen course of action. This acquisition strategy assessment is expected to be complete within 90 days.
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Navy Testimony in the same hearing
It really isn't about blame though. There are a good number of NGOs that will be put in front of both the House and the Senate this year that are going to ask very interesting questions about the Navy's current shipbuilding strategy. So fat I think the Navy has 7 budgeted and 3 more in this years budget.
There are a lot of hurdles to jump just to get the next three, much less the next 48.
BTW, I honestly don't think they will cancel LCS-3, but I think they may not build more this budget year and very likely could buy DDG-51s instead. The reason I don't think LCS-3 will be canceled is because it is being built by Bollinger Shipyards Inc.
This soon after Katrina, there is no political way in hell Congress will allow the Navy to cancel the contract even if the Navy wants to, particularly when the cost overruns for LCS-1 are in Marinette Marine Shipyard.